Tough Times, Bright Future Ahead Detroit EM Orr Tells Grantmakers

Saturday, November 23, 2013

Mike Gallagher
CMF Editorial Correspondent

Kevyn Orr, Detroit Emergency Manager

In the next 10 months, the financial storm clouds impacting Detroit may get a little darker before the sun begins to poke through and residents start to see the benefits from the many internal legal and governmental changes now underway, warned the city’s Emergency Manager Kevyn Orr.

“Whether it’s selling city assets, further reduction of city services or dealing with the incredibly important issue of pensions, the next several months will be critical for the City of Detroit and unfortunately I can’t tell you it will all be good news,” said Orr.

Speaking recently before 85 attendees of the Council of Michigan Foundations' Detroit Area Grantmakers (DAG) meeting, Orr praised the work and generosity of foundations and asked them to continue to play an important and powerful role in helping Motown regain its financial footing.

“The tremendous impact that foundations are having in Detroit is obvious from the resurgence of various locales, including the downtown area which is thriving and where we are seeing new housing, the emergence of new businesses (97% leased) and long-term capital investments and improvements,” said Orr.

Corporations and foundations have helped pump more than $1 billion into the city during the past year alone, “and this is the type of commitment we need to see this great city rise once again,” said Orr.

“Foundations can also be the spark to help ignite that type of positive rebuilding effort in other sections of the city as well, such as its investment in light rail, increased support to nonprofits, supporting school improvement programs and helping end food deserts to name a few.”

Noting the city’s ongoing legal battles – including myriad lawsuits filed against him and his office and the well-publicized Detroit bankruptcy proceedings – Orr said he has tried in his initial tenure to use “smiles, kind words and restraint” with his vocal opponents, but that is about to change.

“The simple reality is the city is broke,” he told the grantmakers. “There is no longer any way to move forward without painful changes in the way the city does business.”

For example, explained Orr, “When you hear some people say the city’s pensions are funded and there is no need for any cuts that is simply not true.

“What hasn’t really come out yet is that the city in recent years borrowed more than $600 million from the pension fund in exchange for now-worthless script. The city is the largest debtor of the pension fund. If that money is not paid back, there is only 12 years left of money to pay pensioners.

“The city does not have the money to repay those loans. This all has to be dealt with.”

Orr shared a story of how a woman approached his mother in Florida and tearfully told her how she had raised several children on her own working for the City of Detroit and, now retired, the only income she has to live on comes from her city pension. The woman asked Orr’s mother to help her.

“My mother called me in tears asking me what I was doing,” said Orr. “I told my mom I had to do my job…and that there were some hard choices that had to be made, but I’m doing my best. That is an example of how personal this has become. It’s tough for everyone, I understand that.”

Additionally, said the embattled emergency manager, “Since 2005 Detroit officials have borrowed more than $1.8 billion to run the city. Also, in any given year the city has $200 million in discretionary funding to pay for essential city services…we have to find a way to free up more money.”

The bottom line, noted Orr, is that “I’m trying to be more of a technocrat than a politician. I have 10 months left to do the job I was hired for and I can’t always be a nice guy. I am going to ask for transparency. I’m going to ask the tough questions of our city leaders, especially when it comes to that pension fund: How much did we loan? To whom? What have you done to get it back?”

When it comes to one of the most controversial issues today - second only to city pensions - which is the possibility of selling Detroit assets to pay its bills, Orr is direct. “I felt my first responsibility was we (Detroit) needed stability. But I am also the city’s fiduciary…and all assets are on the table (for possible sale).

Harvey Hollins III, OUMI

Whether it’s the artwork of the Detroit Institute of Arts (DIA), Tunnel Bridge, Belle Isle or the Coleman A. Young International Airport, these city assets are all in play,” warned Orr.

“Regarding the DIA, for example, I asked DIA officials to come to me with proposals (so they can keep the artwork) before the end of the year,” he said. “After that, I have to act…one way or another.”

Harvey Hollins III, director of the Michigan Office of Urban & Metropolitan Initiatives, said he is grateful both Detroit and the State of Michigan has someone of Orr’s intellect, experience and integrity leading the way to the Motor City’s resurgence.

“These are incredibly tough times in Detroit…and Kevyn is doing his best to turn the city around and put it on a stable foundation,” said Hollins. “We all know there are no simple answers and there will be more financial pain and heartache in the months and years ahead. But that is the path to a better future.”

# # #

News type: